Forum Help

If you want to ask about changing your username, have login problems, have password problems or a technical issue please email forumteam@moneysavingexpert.com

Posting help:

If you want to ask why a word can't be typed, your signature's been changed, or a post has been deleted see the Forum Rules. If you don't find the answer you can ask forumteam@moneysavingexpert.com though due to volumes we can't guarantee replies.

I know there are a lot of questions about this on this forum. I am not asking a specific question about my own circumstance, but I am interested in how you go about making the decision on whether to fix and for how long.

Do you plan on moving? If so, when. That would normally dictate the maximum you fix for.
Do you want the cheapest fixed or to pay a little more for longer term surity in what your payments will be?

Those are 2 of the big ones for me.

I am a Mortgage Adviser

You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.

Thank you. Yes, it definitely seems like they are the ones to start with.

Assuming the answers are that they don't plan on moving and that their aversion to risk is middle-of-the-road, where do you go from there?

When we got our mortgage, my method was to compare a 5y fix to a 2y fix +3y. With the 3 years being the variable. I then asked 'how high does my available interest rate have to be for the 3y period to mean I don't save money by taking a 2y fix?' Not sure if I have worded that in a way that makes sense.

Thank you. Yes, it definitely seems like they are the ones to start with.

Assuming the answers are that they don't plan on moving and that their aversion to risk is middle-of-the-road, where do you go from there?

When we got our mortgage, my method was to compare a 5y fix to a 2y fix +3y. With the 3 years being the variable. I then asked 'how high does my available interest rate have to be for the 3y period to mean I don't save money by taking a 2y fix?' Not sure if I have worded that in a way that makes sense.

When we chose our existing mortgage, one of the factors we took into account was that (hopefully) we'd be reducing LTV over time and therefore have access to better rates. This would, we figured, somewhat cancel out any rate rises. Is it silly or sensible to take this into account?

When we chose our existing mortgage, one of the factors we took into account was that (hopefully) we'd be reducing LTV over time and therefore have access to better rates. This would, we figured, somewhat cancel out any rate rises. Is it silly or sensible to take this into account?

You also have to take into account upfront costs. Depending on term and balance, a 2-year fix at 1.1% with a hefty fee may well be, in fact, the equivalent of a 1.7% with no fees. Paying an upfront fee every 5 years instead of every 2 can make a difference, especially for smaller mortgages.

Also, how secure is your job? A friend of mine got a 5-year fix because he joined a start-up and figured he might be looking for a new job after 2 years or so, but not after 5: by that time the start-up should either work out or he should be in another position.

Are your circumstances likely to change? Do you have any reason to suspect you would be eligible for a mortgage now but not in 2 years? Imagine a couple planning to have their first child, with both parents working. Childcare costs will be incredibly high till primary school age, but will drop substantially once the child starts school. Etc...

Do you have any variable income, like bonuses, commissions, etc? If yes, remortgaging every 2 years makes it easier to overpay this additional, and hard to predict, income more often without paying penalties.

You also have to take into account upfront costs. Depending on term and balance, a 2-year fix at 1.1% with a hefty fee may well be, in fact, the equivalent of a 1.7% with no fees. Paying an upfront fee every 5 years instead of every 2 can make a difference, especially for smaller mortgages.

Also, how secure is your job? A friend of mine got a 5-year fix because he joined a start-up and figured he might be looking for a new job after 2 years or so, but not after 5: by that time the start-up should either work out or he should be in another position.

Are your circumstances likely to change? Do you have any reason to suspect you would be eligible for a mortgage now but not in 2 years? Imagine a couple planning to have their first child, with both parents working. Childcare costs will be incredibly high till primary school age, but will drop substantially once the child starts school. Etc...

Do you have any variable income, like bonuses, commissions, etc? If yes, remortgaging every 2 years makes it easier to overpay this additional, and hard to predict, income more often without paying penalties.

In terms of our situation, our current fix isn't up until the end of the year, so there's no real point us getting bogged down in specific figures. It's just been on my mind recently hence this thread and this one I made about adding to the pension vs overpaying on the mortgage.

Up front fees are certainly relevant. Because we have such a massive mortgage (about £272000 right now) it seems that we save a bit of money by paying the fee but, obviously, paying one every two years is more expensive than paying one every five.

My OH's job is as stable as a job can be and we won't be having any more children, so those things aren't a concern. Having said that, though, because our mortgage is so enormous we'd rather not push our luck going for a full remortgage. We're planning to just get a new product from our existing lender (Nationwide) instead.

Lots to think about. It's interesting to see how other people make their decisions.

PS I see from your other thread that your LTV now is ca 90%. A shorter fix (2 or 3 instead of 5 years) would make sense if, at the end of the period, your LTV will have gone down enough that a new mortgage should be cheaper. Of course LTV is a function of how much you pay into the mortgage and how much the property appreciates or depreciates; the former is within your control, the latter clearly isn't! If the area appreciates substantially your LTV will plummet.

Also, a reason why I don't find mortgages of 5 or more years appealing is the prospect of being tied to the property for too long: I don't like the idea that early repayment fees would be a big deterrent from moving elsewhere because of schools or a new job. Truth be told, though, most mortgages are portable, so you should be able to move without changing lender, if you meet their criteria at the time of the move. Still... Of course this is extremely subjective and this point may well be utterly irrelevant for you.

Do you have reason to believe many other lenders would reject you? Have you calculated a monthly budget of net salary vs all outgoings? Of course you should include and reallocate monthly those expenses you only incur once or twice a year (£ 3,000 a year summer holiday = £ 250 a month).

What else? If you stay with the same lender, you typically don't need to pay for solicitors' fees, as the bank already has a lien on your property. Some banks don't even require a new valuation when you remortgage, depending on circumstances. These savings can add up.

PS I see from your other thread that your LTV now is ca 90%. A shorter fix (2 or 3 instead of 5 years) would make sense if, at the end of the period, your LTV will have gone down enough that a new mortgage should be cheaper. Of course LTV is a function of how much you pay into the mortgage and how much the property appreciates or depreciates; the former is within your control, the latter clearly isn't! If the area appreciates substantially your LTV will plummet.

Also, a reason why I don't find mortgages of 5 or more years appealing is the prospect of being tied to the property for too long: I don't like the idea that early repayment fees would be a big deterrent from moving elsewhere because of schools or a new job. Truth be told, though, most mortgages are portable, so you should be able to move without changing lender, if you meet their criteria at the time of the move. Still... Of course this is extremely subjective and this point may well be utterly irrelevant for you.

Do you have reason to believe many other lenders would reject you? Have you calculated a monthly budget of net salary vs all outgoings? Of course you should include and reallocate monthly those expenses you only incur once or twice a year (£ 3,000 a year summer holiday = £ 250 a month).

What else? If you stay with the same lender, you typically don't need to pay for solicitors' fees, as the bank already has a lien on your property. Some banks don't even require a new valuation when you remortgage, depending on circumstances. These savings can add up.

It's partly that Nationwide were pretty generous for our specific set of circumstances and it's partly that we just not up for going through the whole, gruelling mortgage application again for a while!

Fixed rates are about security and fixed term is about balance between security and economy.

Second guessing what is going to happen to rates is a dangerous game as many existing borrowers will witness.

I am a Mortgage Broker

You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.

How this site works

We think it's important you understand the strengths and limitations of the site. We're a journalistic website and aim to provide the best MoneySaving guides, tips, tools and techniques, but can't guarantee to be perfect, so do note you use the information at your own risk and we can't accept liability if things go wrong.

This info does not constitute financial advice, always do your own research on top to ensure it's right for your specific circumstances and remember we focus on rates not service.

Do note, while we always aim to give you accurate product info at the point of publication, unfortunately price and terms of products and deals can always be changed by the provider afterwards, so double check first.

We don't as a general policy investigate the solvency of companies mentioned (how likely they are to go bust), but there is a risk any company can struggle and it's rarely made public until it's too late (see the Section 75 guide for protection tips).

We often link to other websites, but we can't be responsible for their content.

Always remember anyone can post on the MSE forums, so it can be very different from our opinion.

MoneySavingExpert.com is part of the MoneySupermarket Group, but is entirely editorially independent. Its stance of putting consumers first is protected and enshrined in the legally-binding MSE Editorial Code.